1. Financial Modeling Overview Presented to: December 2, 2010

2. 2 AGENDA I.Modeling Overview II.Assumptions III.Transactional Balance Sheet IV.Goodwill V.Debt Page VI.Re-linking financials VII.DCF

3. 3  We have our basic model with is, bs, cf, d&a, and debt schedules  We need to forecast :  Determine what our deal will look like  Create a transactional balance sheet  Calculate Goodwill  Update the debt page  Ensure that the balance sheet balances OVERVIEW

4. 4  Step 1, we need to come up with our assumptions about the proposed transaction  What do we know?  We know that a financial sponsor (investment firm) is looking to acquire Acme Manufacturing from the retiring owner for $27 million dollars (cash free and debt free transaction)  They were able to secure a senior term loan for $10 million, a subordinated loan for $6 million, and a revolving line of credit of $4 million (to help pay fees – not all of this line will be drawn at close)  The retiring owner is willing to roll $2 million of their proceeds into the new company so that they will still retain a portion of the business going forward ASSUMPTIONS

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8. 8  Step 2, Create a transactional balance sheet TRANSACTIONAL BALANCE SHEET

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10. 10 GOODWILL

11. 11 GOODWILL

12. 12 GOODWILL Begins Copy Formulas Down Copy Formulas Right

13. 13 GOODWILL

14. 14 TRANSACTIONAL BALANCE SHEET

15. 15  Relink the debt page for new debt DEBT

16. 16 DEBT

17. 17 CASH FLOW STATEMENT

18. 18 BALANCE SHEET

19. 19 DISCOUNTED CASH FLOW

20. 20 DISCOUNTED CASH FLOW

21. 21 DISCOUNTED CASH FLOW

22. 22 DISCOUNTED CASH FLOW